2. What are the different action scenarios considered?

2.1 ACT scenarios

The source document for this Digest states:

Technologies that already exist, or are in an advanced state
of development, can bring global
CO2
emission back to current levels by 2050. Emissions need to peak
between 2020 and 2030. The ACT Map scenario implies adoption of
a wide range of technologies with marginal costs up to USD 50
per tonne of
CO2 saved
when fully commercialized (All costs are in real 2005 US
dollars). This level of effort affects certain energy related
activities profoundly. It would approximately double the
generating costs of a coal power station not equipped with
CO2
capture and storage. The marginal cost figure is twice that
estimated two years ago in ETP 2006, mainly reflecting
accelerating trends in
CO2
emissions and an approximate doubling of some engineering costs,
in part due to the declining value of the dollar.

The task is difficult and costly. Additional investment needs
in the energy sector are estimated at USD 17 trillion between
now and 2050. This is on average around USD 400 billion per
year, roughly equivalent to the
gross domestic product
(GDP) of the Netherlands,
or 0.4% of global GDP each year between now and 2050.

2.2 BLUE scenarios

But returning emissions to 2005 levels may not be enough. The
IPCC has concluded that emissions must be reduced by 50% to 85%
by 2050 if global warming is to be confined to between 2°C and
2.4°C. G8 leaders agreed at the Heiligendamm Summit in 2007 to
seriously consider a global 50%
CO2
reduction target.

Reducing
CO2
emissions by 50% (from current levels) by 2050 represents a
tough challenge. This scenario implies a very rapid change of
direction. Costs are not only substantially higher, but also
much more uncertain, because the
BLUE scenarios demand
deployment of technologies still under development, whose
progress and ultimate success are hard to predict. While the
ACT scenarios are
demanding, the BLUE scenarios require urgent implementation of
unprecedented and far-reaching new policies in the energy
sector.

Based on optimistic assumptions about the progress of key
technologies, the BLUE Map scenario requires deployment of all
technologies involving costs of up to USD 200 per tonne of
CO2
saved when fully commercialised. If the progress of these
technologies fails to reach expectations, costs may rise to as
much as USD 500 per tonne. At the margin, therefore, the BLUE
Map scenario requires technologies at least four times as costly
as the most expensive technology options needed for ACT Map.
However, the average cost of the technologies needed for BLUE
Map is much lower than the marginal, in the range of USD 38 to
USD 117 per tonne of
CO2 saved.
Figure ES.1 shows how the marginal costs of
CO2
abatement in 2050 increase as the targeted
CO2
savings increase beyond those in ACT Map to reach the higher
levels needed for BLUE Map.

Additional investment needs in the BLUE Map scenario are USD
45 trillion over the period up to 2050. They cover additional
R&D, larger deployment investment in technologies not
yet market-competitive (even with
CO2
reduction incentives), and commercial investment in low-carbon
options (stimulated by
CO2
reduction incentives). The total is about USD 1.1 trillion per
year. This is roughly equivalent to the current
GDP of Italy. It represents
an average of some 1.1% of global GDP each year from now until
2050. This expenditure reflects a re-direction of economic
activity and employment, and not necessarily a reduction of GDP.
While there will be impacts on global GDP, these are hard to
predict and beyond the scope of this analysis.

2.3 Benefits from investment

The source document for this Digest states:

While the additional investments required for both
ACT and BLUE scenarios are
a measure of the task ahead, they do not represent net costs.
This is because technology investments in energy efficiency, in
many renewables and in nuclear power all reduce fuel
requirements. In both ACT and
BLUE scenarios, the
estimated total undiscounted fuel cost savings for coal, oil and
gas over the period to 2050 are greater than the additional
investment required (valuing these fuels at Baseline prices). If
we discount at 3%, fuel savings exceed additional investment
needs in the ACT Map scenario, but not in the BLUE scenarios.
Discounting at 10%, results in the additional investment needs
exceeding fuel savings in both the ACT and BLUE
scenarios.

Some investments, of course, are very cost-effective,
particularly in energy efficiency. By contrast, at the high-cost
end of the range required for the
BLUE scenarios, some
investments are only economic with a high
CO2
reduction incentive. Not all the necessary investments reduce
fuel costs, however. Investment in CCS will increase the amount
of coal needed for a given electrical output, because of the
reduction in power station efficiency.

2.4 A more balanced oil market

The source document for this Digest states:

In addition to their environmental benefits, the
ACT and BLUE scenarios
also show a more balanced outlook for oil markets. In the ACT
Map scenario, demand for oil continues to grow. It rises by 12%
between now and 2050, which is much less than in the baseline.
The BLUE Map scenario shows a much more marked difference, with
oil demand actually 27% less than today in 2050. However, in all
scenarios massive investments in
fossil fuel supply will be
needed in the coming decades.